Korean battery stocks gain ground over highly-anticipated US rate cuts

The main plant of secondary battery maker LG Energy Solution in Ochang, North Chungcheong Province / Korea Times file

Korean secondary battery stocks are gaining ground as investors anticipate a bullish shift in the industry following the U.S. Federal Reserve’s expected rate cuts next year.

Of the major battery shares on the benchmark KOSPI, LG Energy Solution jumped 3.05 percent to close at 422,500 won ($324), Thursday, when the Fed held its key interest rate steady for the third straight time and penciled in at least three rate cuts in 2024.

The battery maker's shares fell slightly, Friday, retreating 0.12 percent to 420,000 won. But analysts shrugged off the possibility of an extended fall, pointing out the company is the KOSPI’s third-largest market cap stock and, as such, continues attracting foreign investors after the Fed’s rate freeze.

Investors from abroad net purchased 57,847 shares in LG Energy Solution, Thursday, and then another 1,605 shares, Friday, after net selling shares — 17,672, 6,707, and 11,491 — in the three days preceding the Fed’s rate pause announcement.

“LG Energy Solution can be said to be one of the favorite picks for foreigner investors with eased concerns over the flight of foreign capital searching for safe haven assets,” said Joo Min-woo, a researcher at NH Investment & Securities.

He noted other stocks in the battery sector are anticipated to be powered by the Fed’s steps for the rate cut.

Battery maker Samsung SDI advanced 4.42 percent, Thursday, and 0.89 percent, Friday, on the heels of the U.S. rate freeze.

Correspondingly, Yuanta Securities picked LG Energy Solution and Samsung SDI as “the two most profitable stocks” in the battery industry next year.

During the two aforementioned days, POSCO Holdings climbed 1.77 percent and then 4.12 percent, while foreigners net purchased 95,418 shares and another 98,705.

POSCO Holdings and its affiliates have been trying to bolster eco-friendly business portfolios. They include POSCO Future M, a battery materials manufacturer whose shares gained 7.53 percent and 3 percent.

The improved investor sentiment for battery-related stocks was also witnessed on the Kosdaq.

Specialized in electric vehicle battery recycling, EcoPro slid 3.02 percent, Thursday, but advanced 5.57 percent on the following day.

Meanwhile, the Fed’s borrowing rate stays in a range of 5.25 percent to 5.5 percent, as compared to the Bank of Korea’s 3.5 percent.